Correlation Between China Securities and Shandong Link
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By analyzing existing cross correlation between China Securities 800 and Shandong Link Science, you can compare the effects of market volatilities on China Securities and Shandong Link and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in China Securities with a short position of Shandong Link. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Securities and Shandong Link.
Diversification Opportunities for China Securities and Shandong Link
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Shandong is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding China Securities 800 and Shandong Link Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Link Science and China Securities is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on China Securities 800 are associated (or correlated) with Shandong Link. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Link Science has no effect on the direction of China Securities i.e., China Securities and Shandong Link go up and down completely randomly.
Pair Corralation between China Securities and Shandong Link
Assuming the 90 days trading horizon China Securities 800 is expected to under-perform the Shandong Link. But the index apears to be less risky and, when comparing its historical volatility, China Securities 800 is 2.13 times less risky than Shandong Link. The index trades about -0.1 of its potential returns per unit of risk. The Shandong Link Science is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2,125 in Shandong Link Science on September 13, 2024 and sell it today you would lose (12.00) from holding Shandong Link Science or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Securities 800 vs. Shandong Link Science
Performance |
| Timeline |
China Securities and Shandong Link Volatility Contrast
Predicted Return Density |
| Returns |
China Securities 800
Pair trading matchups for China Securities
Shandong Link Science
Pair trading matchups for Shandong Link
Pair Trading with China Securities and Shandong Link
The main advantage of trading using opposite China Securities and Shandong Link positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Securities position performs unexpectedly, Shandong Link can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Shandong Link will offset losses from the drop in Shandong Link's long position.The idea behind China Securities 800 and Shandong Link Science pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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